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Consolidating Below 0.68 Ahead of US Inflation


  • Economists expect an acceleration in US inflation.
  • Business confidence in Australia fell in June.
  • Investors expect a drop in employment change in Australia.

Today’s outlook for AUD/USD is bearish as the dollar rally has not yet peaked. Economists believe US inflation has accelerated to 1.1% monthly and 8.8% annually. Investors will be paying close attention to the annual core CPI. If this eases, it will confirm a peak in inflation, which could convince the Fed to relax its aggressive rate hikes.

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The CPI and other indicators showed a peak in inflation in March, but the journey back to the 2% target will be long and hard.

On the other hand, business confidence in Australia went down in June, as shown in Tuesday’s National Australia Bank Ltd survey.

“Confidence sank below average in June as inflation and interest rate hikes clouded the outlook,” said NAB group chief economist Alan Oster.

“Confidence in the retail sector took a significant hit, falling more than 20 points to be well into negative territory, reflecting concerns about the outlook for household spending.”

AUD/USD key events today

Australia will release a jobs report showing the change in the number of people employed in June. Investors expect a drop from a previous 60.6K to 30.0K in employment and a drop from 3.9% to 3.8% in the unemployment rate.

The United States will release inflation data. This data will show the price change and how rate hikes have affected these prices. If inflation comes in higher than expected, we could see the pair collapsing as it would mean the Fed needs to do more.

AUD/USD technical outlook: Retracement to the 30-SMA

AUD/USD outlook

Looking at the 4-hour chart, we see the price pulling back after making a lower low. The price is trading below the 30-SMA, showing bears are in control while the RSI supports bearish momentum below 50.

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At this point, the price is close to the 30-SMA, which has previously acted as resistance. The price might consolidate at this level before picking up to break above the SMA or bounce off and head lower. If bearish momentum gets more substantial, we could see the price heading for 0.67008, which is around a psychological level. However, if bulls break above the SMA, the price might retest 0.68598, a strong resistance level.

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